Reverse Bayesianism and Act Independence
Journal of Economic Theory, Forthcoming.(2020). Georgetown Law Faculty Publications and Other Works. 2263
31 Pages Posted: 15 Jun 2020 Last revised: 2 Jun 2022
Date Written: May 19, 2020
Karni and Vierø (2013) propose a model of belief revision under growing awareness—reverse Bayesianism—which posits that as a person becomes aware of new acts, consequences, or act-consequence links, she revises her beliefs over an expanded state space in a way that preserves the relative likelihoods of events in the original state space. A key feature of the model is that reverse Bayesianism does not fully determine the revised probability distribution. We provide an assumption—act independence—that imposes additional restrictions on reverse Bayesian belief revision. We show that with act independence knowledge of the probabilities of the new act events in the expanded state space is sufficient to fully determine the revised probability distribution in each case of growing awareness. We also explore what additional knowledge is required for reverse Bayesianism to pin down the revised probabilities without act independence.
Keywords: act independence, reverse Bayesianism, safety regulation, unawareness
JEL Classification: D83, K23
Suggested Citation: Suggested Citation